DATE: March 2, 2015
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Russell Truell, Assistant City Administrator / CFO
Mike Lowe, Comptroller
Brian Wilcox, Purchasing Manager
SUBJECT:
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Consideration Of Contract Award For Financial And Compliance Auditing Services For The City For The Fiscal Year Ending June 30, 2015, With Up To Four (4) Additional Consecutive One-Year Optional Renewals For Fees Established At The Time Of The Initial Proposal, For A Maximum Possible Term Of Award Of Auditing Five (5) Fiscal Years Total (Purchasing Office Procurement Solicitation No. 2015-020; To Be Budgeted In Future Fiscal Year Budgets; Contract No. 2015-0060); (3/12/15 Finance 3-0)
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Purpose
The purpose of this procurement is to purchase municipal financial and compliance auditing services for the City. The services to be rendered pursuant to this procurement solicitation are to be offered for the fiscal year ending June 30, 2015. At any time after commencement but before or as soon as practicable after the completion of the scope of work, the City and the vendor may exercise an option to extend the term of award up to four (4) times, each time for the audit of one (1) additional fiscal year, for a maximum possible term of award of auditing five (5) fiscal years total.
Background
Each fiscal year, the City’s General Fund, Water Utility Fund and Wastewater Utility Fund budget monies adequate to procure annual municipal financial and compliance auditing services for the City of Franklin. The purpose of this procurement is to comply with state law requiring an annual audit for each municipality. The City’s practice is to have 50% of the cost of the audit to be borne by the General Fund, 25% by the Water Utility Fund, and 25% by the Wastewater Utility Fund. Note that the majority of the cost of each annual audit is incurred during and paid by the budget for the first fiscal year immediately following the fiscal year being audited.
With the audit for fiscal year ending June 30, 2006, the City completed a term of service encompassing nineteen (19) years with the firm of Yeary, Howell & Associates of Nashville. At its March 6, 2006 regular meeting, the City’s Budget and Finance Advisory Committee, in its role as the City’s Audit Committee, recommended an auditor rotation pursuant to a competitive selection process among qualified firms. On March 14, 2006, the Board of Mayor and Aldermen approved this recommendation. Thus, for the audits of fiscal years 2007 through 2010, the City engaged the services of the firm of Alexander Thompson Arnold PLLC of Jackson, and for fiscal years 2011 through 2014, the City engaged the services of the firm of Crosslin & Associates, P.C. of Nashville.
The City published on January 15, 2015 a Notice to Bidders in the Williamson Herald for financial and compliance auditing services. In addition, solicitation documents were sent on or about the same date directly to twenty (20) potential proposers known or thought to be interested in this solicitation. According to the terms of the 2015 solicitation, “Renewal of the contract for audit of the subsequent four (4) fiscal years, one year at a time, will be at the option of the Budget and Finance Advisory Committee and/or the Board of Mayor and Aldermen.” For the 2015 solicitation, no restrictions were imposed by the City as to which firms, including any firms previously engaged by the City, could submit proposals that would be evaluated so long as the proposals comply with the instructions, requirements, terms and conditions of the procurement solicitation.
Technical proposals from the seven (7) firms who submitted proposals were publicly opened at the submittal opening held on February 17, 2015, and cost proposals from the same seven (7) firms were opened after the technical proposals had been reviewed and evaluated, on February 27, 2015. A tabulation of the proposals received for this solicitation is attached.
The RFP provided as follows relative to the selection process and criteria:
Proposals will be reviewed and evaluated by an evaluation team. Criteria to be used in evaluating the proposals will include the following:
1.) Qualifications and capabilities of the firm, its coordinating office and its management as measured by the number of firm employees and years in business and type of experience. (15% of total score)
2.) Makeup and qualifications of audit team as evidenced by the number of members assigned to the audit team, their educational background, their experience with the firm, and their experience in governmental auditing. (15% of total score)
3.) Prior experience with local government audits and GFOA Certificate of Achievement programs, GASB 34 and a minimum of three (3) references from past governmental audits. (Information to be provided shall include client name, client address, description of work, contact name and title, and contact telephone number.) The evaluating team will consider number of governmental audits of like size, number of GFOA awards received by governmental units on which the firm provided audit services and prior GASB 34 experience in implementation, consulting, or training. (30% of total score)
4.) Understanding of the City’s audit needs as indicated by a thorough and complete technical proposal clearly addressing in sufficient detail each requested item. (15% of total score)
5.) Fees both in the initial year and subsequent renewals to include consideration of the type and quantity of services provided in the base audit number. (25% of total score)
The evaluation team will recommend an audit firm to the Budget & Finance Advisory Committee of the Board of Mayor and Alderman, who in turn may make its own recommendation to the full Board. The Board’s approval, if granted, of a proposal will authorize the Mayor to execute a contract between the City and the selected audit firm. A contract will be awarded for audit of only the fiscal year ending June 30, 2015. Renewal of the contract for audit of the subsequent four (4) fiscal years, one year at a time, will be at the option of the Budget and Finance Advisory Committee and/or the Board of Mayor and Aldermen.
The City reserves the right to reject any or all proposals, to waive technicalities or formalities and to accept any proposal deemed to be in the best interest of the City of Franklin. Selection of an auditor and the contract to audit shall be subject to the approval of the Comptroller of the Treasury for the State of Tennessee.
The 2015 audit proposal evaluation team consisted of the following staff members:
• Financial Analyst Glenda Driver
• Financial Manager Katie Hilty
• Comptroller Mike Lowe
• Assistant City Administrator Russ Truell
• Business Process Improvement Manager Michael Walters Young
Based on the prescribed selection criteria, including fees, the proposal that was scored the highest by the proposal evaluation team is the proposal from Crosslin & Associates, PLLC.
The State of Tennessee Comptroller of the Treasury prescribes the form of contract to be used for municipal financial and compliance auditing services. Please note that the contract must be approved by the State’s Comptroller of the Treasury.
Financial Impact
The proposal scored highest by the proposal evaluation team, from Crosslin & Associates, PLLC, is in the following amounts by fiscal year:
|
Audit of fiscal year ending June 30, … |
Total fees proposed by Crosslin & Associates, PLLC |
|
2015 |
$47,500 |
|
2016 |
$48,000 |
|
2017 |
$48,500 |
|
2018 |
$49,000 |
|
2019 |
$49,500 |
As the services contemplated would be allocated to future fiscal years, the budget for this expenditure has not yet been established.
Options
In accordance with the solicitation documents, the City reserves the right to reject any and all proposals.
Recommendation
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Because maintaining an independent working relationship between staff and the City’s auditors is critically important, and in accordance with the procurement solicitation, staff makes no recommendation for the procurement of municipal financial and compliance auditing services for the City of Franklin for the fiscal year ending June 30, 2015, with up to four (4) additional consecutive one-year optional renewals, but instead forwards the results, summarized on the attached tabulation of proposals, of a review and evaluation of the seven (7) proposals received, conducted in accordance with the selection criteria established in the solicitation. Staff does, however, recommend that any award be made contingent upon Law Department, City Administrator and State of Tennessee Comptroller of the Treasury approval of City Contract No. 2015-0060. Purchasing Manager Brian Wilcox is of the opinion that the prepared request for proposals as distributed allowed for competition among multiple vendors, and that the Proposal Evaluation Team’s evaluation appears to be made in a fair and impartial manner based upon the proposals received.